Tata Sons Chairman N Chandrasekaran on Saturday said Air India, which is undergoing a transformation, is not just a business opportunity but a “responsibility” for the Tata Group.
“The aviation sector faces continuous challenges,” he said, adding that global supply chain issues make the availability of parts, infrastructure, and new aircraft unpredictable.
“When the Tata Group decided to buy Air India in 2022, people both publicly and privately asked me why. When the Group was doing well, why was it getting into this sector?” Chandrasekaran asked in his keynote address at an event here to celebrate the 121st birth anniversary of Tata Group founder JRD Tata.
“But I firmly believe that for the Tata Group, Air India is just not a business opportunity. It's a responsibility,” he added.
The Tatas acquired loss-making Air India along with Air India Express in January 2022, and since then, the group has been implementing an ambitious five-year transformation plan. However, progress has been slower than expected due to various factors, including global supply chain disruptions that have delayed aircraft upgrades and deliveries.
“Every single percentage growth in GDP will give a 2 per cent growth in the domestic aviation sector. If India grows 8 per cent, the aviation industry grows 16 per cent. This game will continue for a long time, at least the next three decades. So, this is going to be a very exciting phase of economic growth, and for the aviation sector in particular. But it's not easy,” Chandrasekaran said.
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He noted that aviation is a capital-intensive business with thin margins. “The global supply chain makes the availability of parts and infrastructure pretty unpredictable, and every plan you have becomes difficult because of the situations you face in this area.”
Highlighting India’s economic progress, he said the country is already the fourth-largest economy and is set to become the third-largest. “The 8.2 per cent GDP growth in the July-September quarter is just fabulous. India will probably grow at least 7 per cent this fiscal year,” he added.
Chandrasekaran said rising consumer confidence, consumption-led growth, and public infrastructure spending will further drive the economy. “We will become a USD 5 trillion economy, and beyond that. The pace at which we add each additional trillion dollars will be faster, creating exciting opportunities. But for this, connectivity has to work,” he said.
He also highlighted operational challenges in aviation, noting that some factors, like geopolitics, are unpredictable. “Suddenly, your flight routes may change because you cannot fly over a territory. Longer routes increase fuel costs… we have to manage all of this.”
With growing demand for air travel and rising aspirations, he said the Tata Group is committed to building a world-class airline. “Our domestic fleet should be retrofitted by year-end, and the wide-body fleet over the next couple of years. Supply chain delays slowed progress, but we will start receiving new planes every month over the next three years. We should have almost 95–99 per cent of our fleet modern, and we will work on each of these dimensions. This is our commitment, but it will take time,” Chandrasekaran said.
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